Housing options in the USA

Housing opportunities in the United States of America are becoming exceedingly scarce. The dilemma is faced by the rise of real estate values for a variety of reasons. For starters, many Americans rely on mortgages to fund asset purchases. The rise in mortgage rates and costs, along with falling or stagnant income levels, is causing many Americans to be unable to afford the numerous mortgage products provided by financial institutions. The most hit persons are those in the millennial age group, that is, persons within the age range of 18-34 years (Evans 1). The millennials have to contend with staying at their parent's houses owing to the shrinking job opportunities and further inability to sustain them while staying with their parents at home. The housing market trends in the United States of America further affirm that there is an increase in the number of people renting houses as opposed to the homeowners (Patten and Fry 1). The explanation that is offered to justify such trends is the growth in the cost of living (Leader Publications 1). The increase in the cost of living lowers the spending power and spending potential of many people, therefore, disabling them from undertaking major financial decisions such as home ownership. As a result, the remaining option or choice is to live with parents or to seek for a rental house if a millennial wants to move out (Shwetz 1). The increase in the inflation rates further hinders both the boomers and the millennial from having access to the housing market. An increase in inflation leads to an increase in the cost of living. Additionally, an increase in inflation rates also leads to an increase in the interest rates for the various mortgage options that one may consider in the quest for home ownership.

The crisis related to home ownership is further exacerbated by the increase in population. The population growth leads to an increase in demand with the supply of houses to the dependent population not matching the requirements. Since the housing sector utilizes the perfect competition model of business when the demand exceeds the supply, the prices of the commodities that re-offered by the seller tend to rise. In which case, the home owners find a better chance in this supply and demand relationship, to hike the prices; in this way, they are able to increase their profits. Consequently, this brings about the conflict that exists between the home owners and the millennials.

The trend is highly likely to create a greater gap between the wealthy and the have-nots. The increase in the real estate prices will mean that only the wealthy can afford house ownership. Additionally, to meet the housing demands, the nature of the houses and homes has to change, particularly in the urban areas with the establishment of low-cost apartments for rentals that mainly target the millennial. As a result, the rich are the one with the financial capability of owning such houses with the millennial settling for rental of the established houses. In the society, the majority of the wealthy persons are the bloomers with the millennial struggling to fit within the cohort of the middle class. Therefore, the housing crisis tends to be of benefit to the boomers who either own their homes currently or have the financial capability to establish additional homes and apartments. The increase in the housing prices would further mean that the bloomers are to earn higher compared to their previous earning within the real estate sector. However, the millennial are to bear with the increase in the housing prices and part with substantial earnings in paying for housing.

The advances that are currently being made in the medical field significantly contribute to the population growth. Population growth is realized when the mortality rates are substantially reduced, and the infant and maternal mortality are also reduced. The advancements in the medical field are also likely to lead to a bulging population of the bloomers and a decreasing population of the millennial in the new future. Such may have an impact on housing based on the housing needs and housing types that one may require in the society. The boomers need houses that are relatively spacious and that which can accommodate a relatively bigger family as opposed to young millennial who may comfortably do with a studio room. The trend in a population that would lead to the establishment of the larger houses would also mean that the housing prices are also to increase to meet the needs and specifications of the emerging population.

However, it is important to note that the property market is currently stable and secure. The investment within the real estate sector may be relatively expensive, but the returns are good and rewarding to the investor. There is a rise in renting prices over the past decade and analysts are predicting that the rental prices may continue to be on the rise (Stone 1). Therefore, any person who foresees a future in asset investment is highly advised to get into the real estate owing to the significant benefits that are highly likely to be realized within the sector.

The housing issue in the United States is pushing the millennial not to consider the purchase of houses. According to an article in The Guardian, there was a jump in the acquisition of the single-family homes by approximately 16.6% with the median price of the houses being $321,100 (Mcgee 1). The article further asserts that the Great Depression is the most significant contributor to the fear by the millennial to move out of their parent’s houses. Notably, about 36% of persons within the age bracket of 18-35 years fear to leave with their parents and within their family homes as opposed to moving homes and finding their houses or private shelters (Mcgee 1).

The factors that lead the millennial into establishing their homes within given areas are affordability of housing and the social mobility of the particular region (Thomason 1). Social mobility is a factor that many millennial explore in getting into the middle class within the society. However, few cities in the United States create a good interplay of social mobility and affordability of houses. Most cities that have a high social mobility have relatively expensive rates of housing and vice versa. As such, the millennial population is in limbo over the choice of the region that could be ideal for their living regarding the need to attain the middle-class status and also have the financial capability of affording decent housing in which they can live. The few opportunities for social mobility and affordable housing are compelling most of the millennial to have consideration for the affordable housing, which is often granted by their stay in their parents or grandparents houses (Lin, Chang and Sing 4).

The quest to live up to and maintain the American dream is a factor that explains why the Americans millennial have a quest to get into home ownership. However, the American dream is a pipe dream to a majority of Americans owing to their inability to get into the middle class with stagnating income (Thomson 1). While the government is increasingly making policies to minimize the unemployment rates in the society, there is also need to ensure that the middle class earn desirable income levels that could enable them own homes.

The boomers, particularly the baby boomers, are having difficulties in maintaining their current homes owing to the increase in their family sizes. The increase in the number of children, a factor that leads to the baby boomers, is creating a scenario where the boomers would need extra space for their children. As a result, the baby boomers have a desire to own homes that have some extra bedrooms in which they can live and further maintain a desirable lifestyle. Some baby boomers make a request to buy second homes that could accommodate them and their families, an issue that many boomers are finding difficult owing to the rise in the real estate prices in many parts of the United States (Thomason 1). The issue that affects most of the baby boomers is the lack of a more desirable option since some think that they should downsize their homes while some have the feeling that they need to expand the size of their homes owing to the increase in their population.

The issue that majority of the boomers are facing relates to the strict specification of the houses in which they would want to live in during their retirements. Most of the boomers have a preference of living in homes that have more common spaces such as the family dining area and having the master bedroom on the ground floor. While the boomers get older by the day, their bones get frail, and they cannot be able to use the staircases efficiently. The majority of the housing designs have the master bedrooms on the upper floors, thus, making it difficult for the boomers to have a preference for such houses owing to the challenges in access once they get older.

The financial situation for the boomers is also getting into crisis due to the need to plan for their retirement. There is an increase in the social welfare deductions in the earnings for the boomers and higher premiums for healthcare to cater for their health needs. As a result, the boomers lose a significant proportion of their income in the mandatory deductions by the government, thus, living too little to cater for in their quest to get affordable housing and further take care of their housing needs. Such leads to the current trend in which the boomers prefer to downscale by selling their existing houses and buying smaller homes that cater for their specific need once their children hopefully move out into their houses. This, from an economist point of view, is the last resort for the baby boomers owing to increasing cost of products; the inflation oriented market is also a reason to go by in explain the triggers.

The issue of the children not having the preference or the plan of moving out further complicates plans for the boomers since they are forced to take care of the housing needs of their children. Additionally, the needs for a larger floor space that would accommodate an entire family are also enormous, and the boomers may not contend with renting of houses. As a result, the boomers have no option but to spend highly in the purchase of homes. The financial capability of the boomers is also relatively high, thus, enabling them to find homes, which may not precisely fit within their housing needs but would accommodate them within their budgets. The real estate developers in the United States recognize the challenges that the boomers are going through in the housing sector and are tailoring retirement homes that fit within the budget of most boomers.

The financial institutions are also helping out to solve the housing crisis that many boomers are facing through designing of commercial products that could meet their specific needs. The provision of mortgages upon retirement in which he boomers can finance through their pension benefits is further enabling the boomers to have the financial capability to purchase their homes. This is a case that solves boomers’ problem of owning a house while in old age; the option provides an easy way for the boomers to invest in their future by paying for the mortgages when they are still energetic and young.

In conclusion, the housing sector in the United States is increasingly becoming profitable with the increase in the millennial generation. Though many millennials have the preference of living with their parents, there is an increasing mandate and need by the millennial to live in a geographic region where they can have access to job opportunities. Millennial often dream of living in bigger houses in future. Thus, the crave of getting into the middle-class cohort to realize their dreams. However, the antagonistic relationship between social mobility and housing prices is further complicating the quest by most millennial to live in places that could ideally afford. Settling in the affordable region means that they have to forgo the areas and locations where they could earn higher incomes. Some of the boomers are also making a good threat to downsize on their home sizes with the hope that their children will move out and convert their new homes into retirement homes. However, the spread of population into other cities and towns that are not primarily affected by the housing crisis could prove to be a solution to the housing crisis. Concisely, the housing crisis that currently affects both the boomers and the millennial could lead to an increase in the gap between the wealthy and the have-nots.

Works Cited

Evans, Shelby. “Housing Price Increase, Students Seek Alternative Options Housing Price Increase” Proquest. 2017.

Leader Publications. Millennial Parents Struggle with High Cost of Living. 28 Dec 2016. Web.

Lin, Pei-Syuan, Chang, Chin-Oh and Sing, Tien F. “Do Housing Options Affect Child Birth Decisions? Evidence From Taiwan.” Urban Studies. 2016.

Mcgee, Suzanne. “Millennials aren’t Buying Homes Right Now. What is They Never Do?” The Guardian. 27 May 2016. Web.

Patten, Eileen and Fry, Richard. “How Millenials Today Compare With Their Grandparents 50 Years Ago.” PewResearchCenter. 19 March 2015. Web.

Shwetz, Steve. How the Real Estate Market is shifting as Gen Z Starts Renting. 4 May 2016. Web.

Stone, Brad. “Why Redfin, Zillow, and Trulia Haven’t Killed Off Real Estate Brokers.” Bloomberg. 8 March 2013. Web.

Thomson, Derek. “Why It’s So Hard for Millennials to Find a Place to Live and Work.” The Atlantic. 19 Nov 2014. Web.